Peloton (NASDAQ: PTON) is raising the subscription charge for its on-demand workout programs for the very first time, while slashing the rates of its Bike, Bike+, as well as Tread equipment in an effort to attract new consumers under CEO Barry McCarthy. The PTON stock declined thereafter.
McCarthy, who is at the leadership of the corporation for just more than two months, is expected to make the announcement on Thursday. It came as Peloton tries to reverse a recent steep drop in its stock price.
Peloton’s stock initially rose in reaction to the news until being stalled immediately after 11 a.m. due to trading uncertainty. The stock market has just rebounded marginally, but it is still down roughly 4%.
McCarthy, who formerly served as an executive Netflix and Spotify, has indeed been open about what he saw as a chance to save money at Peloton in previous news appearances. In principle, this would lessen the consumer entry barriers, helping the business to shift its attention to generating recurring monthly revenues.
“The pricing changes being announced today are part of CEO Barry McCarthy’s vision to grow the Peloton community,” a PTON representative stated in an interview with CNBC.
Peloton’s all-access premium subscription in the U.S. would increase to $44 per monthly on June 1 from $39. The monthly charge in Canada will increase to $55 from $49. Global members’ prices will not change, according to Peloton. A virtual subscription will price $12.99 per month for those who do not possess any of Peloton’s equipments.
In a blog post published with CNBC, Peloton explained its decision. The company explained that creating excellent content and also a compelling platform comes at a price. Peloton will be able to keep delivering to customers as a result of the pricing increases, according to the company.
The PTON stock was down by 3.70% and traded at $24.10 (down by 0.93 points) at 02:22 p.m. EDT in the market trading session today. The market capitalization of the stock stood at $7.99 billion. The share volume traded for the PTON stock was 12,388,651, half the average share volume 23,908,503.